tv Your Business MSNBC April 12, 2014 2:30am-3:01am PDT
>> this men's skin care company is successful now. they made a lot of mistakes along the way. and this interior designer discovered the hard way to treat your small clients the same way you treat the big ones. their learning process can help your small business succeed, coming up next on "your business." >> small businesses revitalize the economy.
hi everyone. i'm jj ramberg and welcome to "your business." we all make mistakes, ask any successful entrepreneur and they won't have enough fingers and toes to count all of the bad calls they made. but what you do with those mistakes makes all the difference. we met two entrepreneurs who started a company selling shaving products, who instead of beating themselves up over wrong decisions used them as teaching moments. and while their bottom line took some hits it was part of the learning process. ♪ >> we've been told more than once that if we knew what we were getting into we probably wouldn't have tried. >> we made the decision we were going to enter this for better
or worse. >> men's line j paul may have entered crowded field in 2007, but for founders paul and paul, that was no deterrent. >> our products really are targeted for those guys that do have thick beards like myself. and my business partner paul strong has very sensitive skin. we felt that there really was a market void there. >> for them it was uncharpted territory. >> i had zero, i had no experience at all. came from an oil and gas background and some logistics, we did not have real industry knowledge. >> they may have been at a slight disadvantage, you wouldn't know it. >> we used our savings, we bootstrapped this business from the beginning. j. paul has grown over the last seven years with little outside investment. >> in addition to the website, j. paul products are found all over the country including at nordstrom, macy's and at dozens of high end boutiques they credit for giving them a boost.
>> if we didn't have the 45 to 50 different stores we probably would have never gotten in to some of the high end box retail stores. they needed to see success, see sales. so we proved ourselves at each level. >> sales of travel raisers and anti-aging line are rising, but the pair is humble when talking about the launch. >> there are times where you throw up your hands and say i'm done, other times you feel like hey, we're nailing it. >> they admit they made some mistakes along the way. >> you just have to be willing as an entrepreneur and as a business owner to be willing to make the mistakes. >> one of the first challenges involved the development of packaging. at first, the entrepreneurs turned to china. >> it's a lot less expensive and you can get a lot more for your dollar. >> that just took too much time. >> what we found was that part of being in china is you have to wait six weeks for every iteration of the packaging you're getting so if you get it back and it's not the right color, then you get to wait six
more weeks for them to make an adjustment. it ended up being too cumbersome. >> a canadian company produced the right packaging with the correct shade of brown. but j. paul had wasted a lot of time and money. >> 18 months to move through from the time we first contacted the company in china to when we received the tubes. it was close to about $15,000. from start to finish. >> jennifer says at one point this texas company used a distribution center in conkonl. >> as we were growing and the demand was growing, the orders were coming in. so at the advice of our consultants we moved our operation to a center that was recommended to us. we paid a monthly fee. >> but then the customers started to complain. >> we kept getting more feedback from customers with pictures. this is what arrived to me. and it just wasn't up to standard. we just didn't have the quality control. >> distribution was brought back
to houston. but not without losing money first. >> after it was all said and do we took a 25 -- $20-25,000 hit that we won't be able to recoup. as a result of that, we're getting product that's arriving anywhere damaged. >> marketing was another hurdle. j. paul ran newspaper ads in markets like dallas and chicago where products were starting to sell. they launched a social media campaign. >> we felt that we needed to have some sort of advertising campaign whether it's print media, online. and that was a major mistake. >> the newspaper ad didn't bring in new customers. >> it added up to 15, almost $20,000 in the different cities. >> the social media campaign wasn't better. >> we probably invested close to between 15 and $20,000. closer to $15,000. >> the company was just too new. >> if you're trying to brand a product when you're out of the gates and no one knows your name it's a costly endeavor.
>> the lack of name recognition didn't help when j. paul looked for a spokesperson. >> we felt like we needed to be in the bigger box stores, bigger retail stores. and as a way to bring recognition, exposure and bring some clout we felt like that a celebrity endorsement would give us the cachet we needed to walk in the door. >> despite hiring a talent agent and meeting with one celebrity, nothing materialized. >> i think the official reason was that we were not really a known company. being as small as we were at the time it didn't seem like a risk they were willing to take. >> that search cost them $15,000 which never amounted to anything. but it turns out j. paul never needed that kind of endorsement. the products spoke for themselves and customers responded. >> in the end it really is about your product being able to stand alone by itself. >> while all agree the money loss could have been better
spent this was a learning experience. it may have been costly but in the end j. paul is a better company because of it. >> sure, mistakes probably did motivate us. i don't think every company can do everything right every single day. we're human, mistakes are going to happen. it's how you adapt and learn. >> as i said earlier everyone makes mistakes. that is helpful for all of us to hear about them so we don't feel badly when we go down the wrong path and so we are assured there is a way out. here is another example for you of an interior design company which started turning down smaller clients in favor of big spending onesa and almost went under because of it. >> i have to tell you it was my biggest mistake. i will never make that mistake again. i haven't. i was ashamed of myself. i have to be honest. >> pamela does not sugar coat anything when it talks about how she used to run her business.
>> i looked at this and thought this is one of the stupidist things. >> there was a time her company was booming. back then pamela who splits time between hudson, ohio and the new york city area, had some very large clients. >> i would say on the east coast four and here one. and the one here was the biggest. >> because she had the corporate customers lining up and willing to pay up, pamela started telling some of her smaller clients she was no longer available. >> i had to reassess my jobs. taking a lot of time. i didn't think i was going to be able to take the smaller jobs and do the correct -- the job for my client. >> ernie and his wife tried to work with pamela during that time but she turned them down. >> when she came she is like oh, you need help but i don't have time. i got so many other things going on. >> though pamela was saying no, she wasn't leaving these potential clients high and dry.
she did introduce them to other people. >> i would find other interrier designers and try to hook them up with them, make sure they were feeling at least that they weren't left in the dark. >> the deegs focus on larger jobs ended up coming back to haunt pamela. after refusing so many small customers, her plan to think big went bust. some of the large jobs were cut back or just cut altogether. a change needed to happen and happen fast. pamela decided it was time to redesign her business plan. instead of just thinking big, she knew she needed to diversify by thinking big and small. >> i think probably within 24 hours i started calling my other clients, the smaller clients. i really reassessed and really decided to make amends to those people. >> through a series of phone calls and face-to-face meetings pamela started to repair the damage. >> i went back to these clients and humbly apologized to them. i felt as if i had to make
amends in a little larger fashion. >> she made it clear she wanted back in her customers' lives despite the fact she said no, not that long before. >> i hoped i did not even hurt their feelings. it's very personal my business. i'm in their home. >> ernie remembers the day he and his wife got the call. >> she was very honest she said she had bigger clients and things that didn't work out. >> ernie says pamela's honesty made it easy to decide to work together. he knew any decision was strictly business. >> i understood it completely when she said that and didn't take it personal one bit. she gave i think the thing that struck me was she came on this job and treated as if it was one of her major corporate jobs. >> gary would agree. he says pamela won him over with her top notch service. >> the projects we were giving her were small ones, pamela was always accessible to us. she wasn't here all the time, but she kept her commitments
when she needed to be here or we needed her for a project. >> part of her mission is to let every customer know they are just as valuable as the next. >> i want to take every client's job and make it so important. each client wants to feel like number one. it doesn't matter if it's small or large. >> it also reinforced for her the importance of being open and honest with customers and taking responsibility for your actions. >> learn by your mistakes, apologize when you make a mistake. make amends, don't point the finger. making that mistake that's all you have sometimes. and if you don't make amends and don't do it the right way, you don't have work. tweeting gets you directly in touch with customers. even if you are on top of your game you may be making errors in your execution. here now are five common twitter mistakes. one, not having a header photo. you may already know about the background and profile photos but by default your header is a
solid color. add a new image you under profile setting. two, weak profile text. include relevant hash tags and relevant organizations so people can find you. three, auto posting to facebook. if you do this people who don't understand twitter get confused by hash tags and those who do get it think you're lazy because you're not connecting directly with anyone. four, not adding video to tweets. if your stream is empty or outdated it gives the image your brand is too. make sure to include multimedia in posts. and five, tweeting the full url. each character counts, using sites to short at any link will leave room for people to retweet and they will also track. when we come back, bridging the funding gap between your first and second round, and implementing change in your company without it being
disruptive. and, a sweet idea, today's elevator pitcher wants to change this world through chocolate. if i can impart one lesson to a new business owner, it would be one thing i've learned is my philosophy is real simple american express open forum is an on-line community, that helps our members connect and share ideas to make smart business decisions. if you mess up, fess up. be your partners best partner. we built it for our members, but it's open for everyone. there's not one way to do something. no details too small. american express open forum. this is what membership is. this is what membership does.
every time we get a great idea, we brew it. we taste it. we're disappointed we go back to gee, what could we learn from this. time now to answer some of your business questions. david is the chairman and ceo of gust which operate as platform for early stage equity investing, the founder of new york angels and also the author of the new book "angel investing" the gust guide to making money and having fun investing in start-ups. monica is a managing principal at a new york based equity firm that operates consumer and apparel businesses. so great to see both uf. >> great to be here. >> like having fun in investing. >> congratulations. >> has to be fun.
>> let's get to the first question. about your series a financing. >> how do companies bridge the gap between the c round and a round? there's usually a bit of a chasm there. you've got your product up and working and so the question is how do you find that a round funding? >> i love his question because i i hear it all the time. i'll start with you. you are an angel investor. >> it's starting from a faulty prim miss. it's not like every company as a c round and a round. instead it's a very, very steep pyramid because fewer than one out of 10 companies that have a c round have a a round. one in 50 so. therefore the expectation can't be that you're going to get a series a round after your c. >> sow mean because the company is successful or they don't need snem. >> no. typically because the company is not successful. great they didn't need them. >> the people who are in that position, they have a c round, they are successful, growing but
not quite in the position that they are attracting a round investors. >> to bridge that period the capital can come from friends and family. that's where ploft of the money for early stage start-ups comes from f. you are trying to find the series a invest terse what you want to do is really network and one of the easiest ways to connect is to connect with entrepreneurs that have been funded by the types of people that you want to get funding from, that's sort of the back door into venture capital. those are the people that they have confidence in in getting a qualified lead from one of those entrepreneurs can really go far to open doors. >> and so but the base assumption is that you should take the money from your seed and try and figure out a way that if you don't get that series a, you can still be an operating business. >> when is the average investment from new york angels? >> between 250,000 and 750,000 for a series c round. the first institution
non-friends and family round. >> got it. let's move on to the next. this is about paying your small business taxes. >> since it's tax season, other than my cpa, where is the best place to go in order to see if we are getting the best tax benefits of our small business. >> my first thought is maybe he need as better cpa. but is there any place they can go? >> small business owners need to save money sometimes but business.gov has a host of resources. a bunch of links for various facilities offered by the irs and the sba. tax workshop, on line web a nars and ways to get ideas. i think also your financial adviser can give you ways to save money with tax. again, sort it out with your cpa. i would not take these resources to be the very end of the discussion. >> one of the issues are a lot of people missed out on these, simply because they don't know about them. >> monica is great all of the
things available on line. more important your first take was even more important. and that is if you don't trust your cpa to give you tax advice find another. these are professionals you are hiring, you have to trust them so. if there is any question your cpa doesn't know enough, find another. >> how do you know if he knows. sometimes you don't know what you don't know. moving on to the next one is a question about dealing with change. >> how do you institute change in disruptive innovation in your business without change tog much where people get confused or get concerned about the rapid element of change in the business? >> how do you do that? >> this is a very real question for two reasons. one is the business change. which is pivoting to a different business model, different products. the otter one and i think the question was getting to is the pace of change around you in your industry and every business today is being turned upside-down whether it's restaurants or cars or
construction, retail, all being changed by technology and you have to keep up with that. so one thing to do is to help your employees understand that the world is changing. i found that ted talks at ted.com have talks about future and things happening. they are thought provoking. only 18 minutes. maybe setting aside one or two of these a week and have employees watch them and then discuss how change would impact your business might be a way to get that in the conversation. >> we profiled a baby-sitting company here in new york city and they have ted talk thursday. every thursday or once a month they watch and talk about it. what are your ideas? >> i hear about this question and i think a little about a science fiction movie and how hard it is to get in to something that doesn't feel real when there's no kind of anchor there. there has to be something familiar whether it's for customers or it's for the people in your organization. if you went from a rote every phone to iphone i'm not sure if you had the most fantastic device that a person could really expect it.
it would be too much technology too fast. so you have to find something that feels familiar, that feels familiar to the employees in your organization. >> ease people in. >> yes. >> david, monica, thank you. great advice. i love having you on the show. and we do this every single week here on the show. so take advantage of our experts and send in a question if you have one. you can submit it by going to openforum.com/yourbusiness and hitting the ask the show link. also e-mail us. email@example.com. let's get social now and get advice and wisdom from great entrepreneurial minds on twitter. real estate shark barbara cocoran with our elevator pitcher. when pitching the most important things are equally real passion t ability to communicate well and to sell the idea on your feet. frequent your business panelist scott beale ski tweets, the
magic of great management is to implement and iter rate process without inhibit progress. and success can build a culture of arrogance that will destroy a come. for almost eight years we've been presenting elevator pitches from entrepreneurs around the country in an effort to teach other small business owners the right way to pique the interest of investors. david rose was a panelist on our first show and judged our first elevator pitch from kenny low for his restaurant. his business has grown to more than $4 million in annual sales. we come full circle as monica joins for today's pitcher who has a sweet tooth for success. >> hi, i'm julie mcclain, ceo and founder of steeby sora is a premium bean to chocolate manufacturer in maryland. we create bulk and consumer
chocolate products. i started in my basement as a single mother working on different formulas from all over the world. your products include our funky line, 300 soon, amazon and our website. we are expanding rapidly and seeking a $3.75 million investment to acquire influence production space, expand our product offerings and enhance our sales and marketing. we are expecting a $36 million profit by year five. a return on profits by year three and four, 30 to 35%, and profit by year two. the chocolate industry had in 2012 u.s. chocolate sales were 19 billion in global. chocolate is one sweet deal. >> all right. thank you so much. great pitch. that looks intriguing. i'm going to give you guys each this. on the scale of 1-10, how much did julie pique your interest and once you get that you get
reward of a piece of chocolate. this one looks amazing. chocolate raspberry. >> how do you spell name? >> sibusura. >> for anyone who sees this. david, you are a successful investor. you hear lots of pitches. 1-10? did she pique your interest? >> a 7. one thing she did zblaext 300 stores which is where you are projected by the end of the year is really good. that shows real traction. people are buying what you have to sell. >> okay. and one thing julie can improve? >> the challenge is the economics, so $3.5 million for a chocolate business is going to be really tough. you don't really have the numbers yet to support that kind of amount. also the expectations of investors are usually much, much bigger return than a 15 or 20% annual. >> if you ask for that much you bet ver good reasons why.
>> that's what we're targeting. >> i also gave a 7. and i want to thank you for your passion. i feel like i connected with you in the pitch which i think is good for investors and the product looks fabulous. i think also as david mentioned i want to really understand how you're going to grow to satisfy investor target returns. chocolate is not necessarily high tech so we need to know how we're going to get that return. >> fantastic. good job to you. you can distribute your chocolate. good luck with your company. and if any of you out there have a product or service and you want feedback from our elevator pitch panel on your chances ever getting interested investors, just send us e-mail. the address firstname.lastname@example.org. include a short summary of what your company does, how much money you're trying to raise and then what you intend to do with the money. i look forward to reading about your companies.
how do you make sure your product offerings are way ahead of your competition and permanently stay there? our guest says you have to totally embrace your customers as part of your product team. and take your direction from their feedback on a constant even daily basis. eric peacock is coin and arounder and ceo of my health team. they create social networks for chronic conditions. great to see you. this is a big thing about basically making your customers, your product team and following what they want. >> right. >> it's a different way of doing business than it used to be. >> you really have to create environment where you not only edge courage but embrace that feedback and go out of your way to do that. >> and follow their needs. the first thing is having ambassadors, is this a group of people like a focus group? >> we have a social network for women with breast cancer called my bc team.com. that's a website so we have ambassadors on the site. people who we show the new features to ahead of time and they kick the tires on it is. ambassador could be one of your
favorite clients. the person who comes in your restaurant. you need to give them permission by asking do me the favor of giving me feedback. a lot of your customers won't give you constructive feedback if they are worried it's going to make you feel bad. >> do you give them anything in return or people do it for free? >> you should figure out a way to thank your customers. there are a number of ways. we give shout outs thanking them. they like that. they like that phrase. you can give a discount on the next time they use your service. >> i do think if people like your company they like being part of it. makes people feel part of the process. >> right. when people give you feedback on how your product should work or service should work they become advocates for you. they want to tell more people about it because they had a say in making it a great product. >> a stake in it. collect feedback constantly. how do you do that so it's not over theloaded. >> so not sv going to be your
ambassador. you do have to reach out to the rest of your customer base. if you have online presence, you can use something like zendesk. we have a tab on our webpages that say feedback. we have to release a new version every week. even if you don't have a website you can do this. you can use survey monkey, and create a great survey as long as you have e-mails you can e-mail it out and have hundreds of responses back. collect those e-mail addresses. >> and look at what they do with your product. so you watch people? online there are services where you can watch people interact or you can look at your analytics. >> this is what separates the people that get the a from the b. if you want to make the business great look at what people are trying to do with your product or service. not necessarily what you are giving them but what they are trying to do that might not have been in mind. it's a great source for new product ideas. on my bc team we noticed women were sharing photos and you know, they started tagging them
with key words. what they want to do is create pin boards so you know there is a woman who created her scarf fashion show wearing these scarfs. it's one of our popular features. >> this is not something you created in your conference room. you look at customers. this is great information and again, it's an idea of your customers want something, you are giving them what they want. >> and do it constantly. >> great to see you. thanks. >> to learn more about today's show just click on our website. it's openforum.com/yourbusiness. you'll find all of today's segments plus web exclusive content with a lot more information to help your business grow. you can also follow us on twitter we're@msnbc your biz and follow us on facebook and instagram. next week, entrepreneurs who want to cash in on the booming economy, now have a place to get the tool these need to achieve their small business dreams.
>> we can basically start with an idea in the morning and have a propo type at night. so we do everything in here. we'll use lathes, use mills, we'll use the wood shop. and then grow parts using a threed print tear custom design. >> how new companies like maker house are helping innovators create prototypes that bx the next big thing. remember, we make your business our business. if i can impart one lesson to a new business owner, it would be one thing i've learned is my philosophy is real simple american express open forum is an on-line community, that helps our members connect and share ideas to make smart business decisions. if you mess up, fess up. be your partners best partner. we built it for our members, but it's open for everyone.
there's not one way to do something. no details too small. american express open forum. this is what membership is. this is what membership does. hi, i am rachel maddow. thank you for being with us. this is not a story of north korea, and that's kind of the point. october 9th, 2006, around 10:30 a.m. local time, the ground started to shake beneath a small village in the northeast corner of north korea. halfway around the world back here in the u.s., seismologists recorded what looked to be a 4.3 magnitude earthquake. what happened in north korea that morning was not an earthquake. it was a nuclear explosion. >> kim jung-il defies the u.s. and world and claims to have set off an atomic weapon. >> that day in 2006, the secretive repressive north korean regime showed the world they had built and tested a nuclear bomb.